Editorial: Automakers no longer shielded from feds

April 2, 2009

We pored through the U.S. Constitution and just couldn’t find the clause that says, “the president of the United States shall have the authority to fire the president of any corporation with whom he is dissatisfied.”

Maybe it was an amendment that hadn’t been printed yet in the edition we have?

We understand the argument that it wasn’t quite stark. President Obama didn’t quite fire Richard Wagoner as chairman and CEO of General Motors directly. People from the White House’s Auto Task Force simply informed Wagoner that if GM were to have any hope of getting more loans from the government he would have to go, and so he resigned.

Others note that when a private lender gets involved with a troubled company the lender often has plenty of leverage and it’s not all that unusual to make the resignation of certain top executives a condition of further assistance. So what’s the big deal when the government as lender takes a similar stance?

It is a big deal. Government has the right to promulgate regulations that govern corporate conduct, and to charge corporate executives with criminal or civil offenses when they break the law. But deciding who is to hold certain executive positions in a private corporation is a dangerous precedent.

Even if it was done indirectly rather than by direct order, this was the occupant of the Oval Office making a core decision for a private company.

The government is not like a private lender. It has no money of its own so it must first take it from taxpayers or borrow it from moneylenders foreign and domestic before it can make a loan to a private company. Government uses money, but the true currency of government is power and the use of force — the authority to make others do what you wish or suffer severe consequences. When government expands its power, as it clearly has in this instance, the freedom of all citizens is diminished.

It was especially vexing to hear a president whose only experience in the private sector was as a junior associate in a law firm blithely asserting that the restructuring plans presented by GM and Chrysler simply didn’t go far enough to suit him. He may be right, but he has no intellectual or experiential standing to make such a statement.

Quite frankly, based on what we have observed, if we were on the GM board we might have voted to fire Wagoner long ago. But we’re not on the board, and neither is Obama, despite the power he wields as the apparent lender of last resort.

Whether the power the government has wielded over GM and Chrysler is constitutional or prudent or not, it is not surprising to see it used in such a cavalier manner.

When the auto companies came hat-in-hand (by corporate jet) to the government looking for a handout rather than making severe cuts or filing for Chapter 11 bankruptcy, they ceded a significant measure of control over their own destinies.

By asking the government to save their bacon after a combination of their own mistakes and changing economic conditions put them in deep trouble, they ceased to be fully private enterprises.

Did they know the result would be micromanagement of their businesses?

Did they expect a new president with such a serene and unquestioned faith that the answer to every problem is an expansion of government power?